Affirm(AFRM) The Motley Fool·2024-09-07 22:06Fintech Sector Overview - Fintech stocks have been negatively impacted by rising interest rates over the past two years, but a decline in interest rates could present a buying opportunity for undervalued stocks [1] - Companies with defensible niches, robust sales growth, improving margins, and reasonable valuations are potential turnaround plays in the fintech sector [1] Robinhood Markets (HOOD) - Robinhood's stock has declined more than 70% from its all-time high and is trading nearly 50% below its IPO price [2] - The company's revenue surged 37% to 1.82 billion in 2021 [2] - Adjusted EBITDA improved from negative 536 million in 2023 due to cost-cutting measures [3] - Analysts expect Robinhood's revenue and adjusted EBITDA to grow 39% and 104%, respectively, in 2024 [4] - The stock is trading at 33 times this year's adjusted EBITDA, which is considered reasonable [4] Affirm (AFRM) - Affirm's stock has declined 75% from its all-time high and is still trading 15% below its IPO price [5] - Revenue surged 46% to 1.07 billion to negative 3 billion in fiscal 2025, with adjusted EBITDA improving to negative $58 million [6] Nu Holdings (NU) - Nu Holdings has more than tripled its customer base from 33.3 million in 2021 to 104.5 million in Q2 2024, becoming the fourth-largest financial institution in Latin America [7] - The company's activity rate increased from 76% in 2021 to 83% in 2023, with monthly average revenue per active customer more than doubling [8] - Revenue grew at a compound annual growth rate of 117% from 2021 to 2023, and the company turned profitable in 2023 [8] - Analysts expect revenue and adjusted earnings to grow 40% and 68%, respectively, in 2024, with the stock trading at 25 times forward earnings [8]